Seven Stills

Craft beer, re-imagined as whiskey

Seven Stills

Craft beer, re-imagined as whiskey

All whiskey is made from beer. For centuries, distillers used a low-quality infusion of fermented grains, ignoring its effects on the final whiskey. We re-thought this process: first, we make exceptional craft beers, then distill them into craft whiskeys that are dramatically different than anything else you've had. Since 2013, we've grown 100+ percent each year, and are raising now to open a new 18,000 sq. ft. facility in SF's developing Mission Bay neighborhood to keep up with the high demand.

Why people love us

I met Tim and Clint when they were operating out of a storage facility still proving to the world distilling craft beer creates new and wonderful taste profiles. I remember the hockey-stick sales growth curve Tim showed me on a small whiteboard in that facility - he's bought a much bigger whiteboard since that day so they can track their sales! It's been amazing to see these two hustle and establish Seven Stills as a premier whiskey distillery & brewery in such a short time. I'm really excited to see the next stage of growth for Seven Stills and see them become a staple in every bar across America.

David Shin

Lead Investor, Seven Stills

Seven Stills' bright and industrial tasting room is a great place for small groups thanks to tables, counters, and stools made out of barrels.

Chocosmoke is delicious, chocolatey upfront and earthy like sourdough crust, and Whipnose is astonishing. Distilling amplifies the flavors of mash, but it also has a way of eliminating bitterness and softening sour notes, which makes good work of an IPA’s hoppy profile. Additionally, the process seems to enhance an IPA’s aromas, but on the tongue it leaves a pleasant, prickly sharp whiskey that’s as fresh and sweet as a mowed lawn.

Tomahawp isn’t overdone. The nose finds plenty of musky, peppery hop aromas, but underneath that bitterness there’s a mint chocolate note and hints green apple as well as coffee. The palate kicks off unsurprisingly, a tobacco and heavy herb note, with hits of cloves and burnt toast lingering. The finish is sweeter than expected, but spicy with black pepper and showing lingering coriander notes.
Tomahawp doesn’t reinvent the world of IPA-distilled whiskeys, but it’s still a well-crafted example of the style.

In the news

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We're Fundamentally Changing How Whiskey is Made

Craft beer is booming. But what about craft whiskey? Most people don't realize that whiskey actually starts out as beer. For generations, the conventional wisdom was that the base beer doesn't affect the flavor the finished whiskey. But in 2013, we started making amazing craft beers, then distilling them into whiskey. We ended up with craft whiskeys that are drastically different in flavor depending on whether the beer is an IPA, a sour, or a stout.

We're Building Our Fourth Taproom – the Biggest One Yet

We're building a new flagship brewery / distillery / taproom / restaurant. It's 18,000 square feet at 100 Hooper, in San Francisco's Mission Bay neighborhood, less than a mile from AT&T Park (home to the San Francisco Giants) and the Chase Center (the soon-to-be home for the Golden State Warriors). With so much space, we're putting in a massive tasting bar, retail area, restaurant, kitchen, and even a private lounge, in addition to our brewhouse. We share the building with Adobe's new headquarters for 5,000 employees – a built-in customer base for post-work happy hour.

Craft Whiskeys Made from Craft Beers

We started with our Core Series of seven whiskeys – one for each of the original seven hills of San Francisco. Each bottle is designed by a different local street artist. Since then, we've added the Collaboration Series, made together with other distilleries or visiting brewers, and the Experimental Series, one-off batches exclusively available at our distillery. For beer, we focus on massively dry-hopped, zero-IBU single and double IPAs.

Our Progress So Far

Between 2013 and 2017, Seven Stills has grown at 100+ percent each year, finishing off 2017 with sales of $1.17 million. Our brand is growing strong, and we're for $3.5 million in 2018 sales without our new taproom. 100 Hooper will mark our biggest and most audacious expansion yet, and when it opens in October, we're projecting an extra $4.4 million in sales just from direct-to-consumer sales.

2013

Tim and Clint Found Seven Stills

They put in $30,000 and got to work.

December 2015

Raised $775K Seed Round

Raised for construction of Bayview distillery.

July 2016

Opened Bayview Brewery and Distillery to Public

November 2016

Opened First Satellite Taproom and Restaurant in SF's Outer Sunset Neighborhood

October 2017

Started Canning Beers

People bought them as fast as we could produce them!

March 2018

Completed expansion of brewing facilities to increase capacity 9x

March 2018

Opened Second Satellite Taproom and Resataurant in SF's Stanford Court.

April 2018

Signed Lease for 18,000 Sq. Ft Taproom

Located right outside the new Warriors Stadium in SF's booming Mission Bay neighborhood.

Summer 2018

Taproom Construction

Located right outside the new Warriors stadium.

October 2018

New Taproom Open for Business!

Letter from the Founders

July 31, 2018

Dear Investors,

Thank you for considering investing in our company. When Clint and I founded Seven Stills we were 24-year-olds with the crazy dream of opening up a distillery. On top of that we were trying to open up the FIRST distillery to the public in one of the most expensive cities in the world. It took a lot of hard work and a lot of

When Clint and I founded Seven Stills in 2013 we were two 24-year-olds with an unbelievable amount of hustle and an unexplainable drive to start our own business and succeed.

Of course, there are many factors that should be considered when making a business decision but in my humble opinion, the most important aspect of any company is the founders. Clint and I have had tremendous success growing our company and team over the last five years. We are currently profitable, with a team of 39 employees and a naturally growing business, but there is hardly a day that you won't be able to stop by the brewery/distillery without seeing me and Clint.

Sincerely,

Tim Obert

CEO

Doubled Growth Every Year Since Launch

And we're on track to hit $3.5 million this year, 63% higher than our original projection.

With our expansive new taproom opening in October, we project sales of $9.7 million. When we sell direct to consumers or to-go, we operate an 85% margin. For in-house consumption, it's 95%.

Investor Q&A

Expand all

What does your company do?

All whiskey is made from beer. For centuries, distillers used a low-quality infusion of fermented grains, ignoring its effects on the final whiskey. We re-thought this process: first, we make exceptional craft beers, then distill them into craft whiskeys that are dramatically different than anything else you've had. Since 2013, we've grown 100+ percent each year, and are raising now to open a new 18,000 sq. ft. facility in SF's developing Mission Bay neighborhood to keep up with the high demand.

Where will your company be in 5 years?

In five years, we aim to be the number one brewery and distillery in San Francisco with distribution throughout the United States. We've seen steady growth since launch, growing at a rate of 100+ percent each year. We're on track to reach $3.5 million in sales this year, a 190% increase from last year.

What is Seven Stills?

We're a brewery and distillery. We founded our company in 2013. The model was super unique, which was to make whiskey out of craft beer. We started with that concept, and continued it for our first three and a half years. Then we started getting more into the craft beer, to leverage what we're working on with all these cool projects. Today, our intention is to have the craft beer alongside the whiskeys that we're making from the same craft beers.

What does it mean to make whiskey from craft beer?

We brew beer on site, then use that to make whiskey. We're the only brewery and distillery on the same premises in the United States.
A lot of people don’t realize that a whiskey essentially starts from a beer. A whiskey, in its basic form, is a mash that's been fermented from some kind of grain, usually barley or oats, or for bourbon, it’s corn. That fermented mash is distilled. Then, that distillate is aged in barrels. What we found was, basically, that there was a crossover between that first step of making whiskey and the entire process of making beer. Most distilleries use a low-quality barley or low-quality corn and distillers yeast and crank out something as fast as they can.
What we started experimenting with was high-quality, specialty malted barley, high-quality California brewers’ yeast, and a two- to three-week fermentation process that really let the flavors develop. At that point, we would distill the finished beer. It would be the same beer that we would put in a keg, but instead of kegging it or canning it, we would distill it. Then we would take the distilled alcohol from the beer, put it in a barrel, and age it to make whiskey. The common school of thought was that the flavor profile of the base beer don't have any impact on the finished whiskey, but our model has proven that wrong. All of the whiskeys we make are drastically different in flavor, based on whether they're coming from an IPA or a stout or a sour beer.

How did you develop this hybrid brewing-distilling process?

Years ago, Clint and I were sitting at a bar drinking beer, and he was telling me about a class he was taking at UC Berkeley where he was learning that whiskeys were made from low-quality beer. We had had a couple of drinks, and I had this “Oh!” moment where I said, “We should take some of the beers that I'm home-brewing and distill them.” It was just a fun experiment. We went online and bought a 10-gallon pot still for about $500. We would get together once a week at Clint’s parents house and distill a batch of beer that I had brewed the previous week.
While we were doing that, I started going to the top liquor stores in San Francisco, like Healthy Spirits or Cask, to ask them what they had that was similar to this. They pointed to the obvious people working on projects like this -- for example, Corsair, which uses specialty grains and makes some hopped whiskeys and the like. But we ran out of things to compare it to really quickly. Since there was nobody else doing it, we decided we should be the ones to do it.
Clint was planning to go to grad school. He had saved up about $15,000. I had about $15,000 in my savings account that I had saved from running a transcription business. I asked him if he would take the money that he had saved up to start a business with me. He said yes, and we started the business in 2012. We incorporated in 2013 and opened for business in August of that year.

How have you grown in the last five years?

We're insanely scrappy. We started with $30,000. We used that money to contract distill a batch of whiskey, and then we just hit the streets. We had a license that allowed us to self-distribute, so we made about 30 gallons of whiskey with the first run. That's about six five-gallon barrels. Clint and I would park our car on one block of San Francisco and walk down the street and start offering tastes of our whiskey to business owners. If they liked it, they would place an order for one to three bottles. We would run back to Clint’s car or my car and pick up the bottles, bring them back with an invoice, and drop it off right there.
We eventually recovered our money and made a little bit more, which we used to make 60 gallons of whiskey. Then we made 120 gallons, and then 240 gallons, and it got to the point where we were making 240 gallons of whiskey like every other week and the people we contracted with were not able to keep up with us. At that time, we used a brewery to produce our beer and then we used a distillery to produce our spirits. We would go to the East Bay, brew a batch of beer, rent a tanker truck, and drive it up to the distillery. Then we would rent a U-Haul, fill it up with the un-aged whiskey, drive it back to a storage unit in San Francisco, and age it. We did that for about three years.
In 2015, we reached capacity with our contract facilities, so we decided to open up our own brewery-distillery. That was phase two of our business, and that's when things started absolutely taking off. We opened up the brewery and distillery in Bayview in San Francisco in August 2016. We were the first distillery open to the public in San Francisco's history. That definitely helped keep the lights on, because opening our facility to the public allowed us to offer tastings, do tours, and sell bottles directly to consumers. Our revenue started increasing drastically as soon as we opened that spot.
We ended up opening our first satellite location in November 2016, a taproom in the Sunset where we serve our beers. We're also serving food. In 2017, we just fought to keep up with all of the expansion. We started canning beers in October 2017. They started selling out faster than we were making them, which was kind of the same issue we had with the whiskey a few years earlier. We started looking for a way to make more beer just to keep up with the demand. We’re planning to make 5,000 barrels of beer this year, and that 5,000 is pre-selling out before we're able to make it. It's absolutely crazy.
We just finished an expansion at the distillery on Egbert. Now, we’re in the middle of opening up a much larger flagship facility in Mission Bay of San Francisco. It's about three blocks away from where the new Warriors stadium is going to be opening in 2018. We're planning a 19,000 square foot brewery, distillery, restaurant, cocktail bar, taproom, and bottle shop, and then we're going to create a hidden upstairs room that will be invitation-only. That expansion will catapult us to 20,000 to 30,000 barrels per year, from the 5,000 we're doing now. We’ve gone from growing 100% per year to 350% this year and anticipate another 200% next year.

What are your revenues?

In 2013, we did about $100,000 in sales, and we were only open from August to December. The second year we did about $250,000. In 2015, we did $500,000 or $600,000. Then, last year, we sold about $1.2 million. This year we're projecting close to $3.5 million.
It’s important to note that that’s $3.5 million without the new Mission Bay project. With the new project, we're projecting an extra $4.4 million in revenues per year in just direct-to-consumer sales. By the end of 2019, we're projecting a minimum of $10 million per year.

What flavors are you focused on now?

I am so into craft beer it's not even funny. I’m always seeking out the absolute best things. What I've started trying to do is to just make things that match what I want to buy and what the people I hang out with want to buy. One of the most important parts of my process is traveling throughout California and trying new beers. This state has completely different styles. Some of them don’t taste like a beer at all. I hadn't really been into the idea of packaging beer until I started trying zero-IBU beers. I just thought, “This is unbelievable.” Then I started looking at who else is using the model of an IBU of zero. Traditional IPAs use a bunch of hops in the boil kettle and you make it super bitter and super hoppy. Zero-IBU beers use zero hops in the boil kettle. It's all aromatic. Basically, it tastes like a can of juice. I saw breweries like Monkish and Treehouse and Trillium and Hill Farmstead and Alvarado Street, who are spread across the country but are doing the exact same model -- they're making these insanely juicy single and double IPAs and they're selling them direct to consumers in 16-ounce cans. They're doing between 200 and 500 cases per release and selling out in a matter of hours.
I decided we've got to do this exact same thing, but what I'm trying to do is take their model and make it more approachable for everybody. These guys are selling extremely quickly and making so much money just from direct-to-consumer sales. We did the math on Treehouse, and I think they're doing $20 million a year in direct-to-consumer can sales from IPAs. It's absurd. And these are breweries that most people haven’t even heard of. Monkish, down south, sells about 360 cases per week direct to consumers.
Basically, for Seven Stills, we've already established the distribution model in California through our spirits because we've been distributing for the last four and a half or five years. We've got over 2,000 stores, bar,s and restaurants in California that carry our product. What we're trying to do is scale up with these juicy IPAs and put them into all the stores where we're already selling our whiskey. We've already got relationships throughout California, with Total Wine, Whole Foods, Bevmo, all of the specialty stores in the Bay Area. At this point, it's just a matter of making more.

Why do you self-distribute?

We have three locations with a fourth on the way, and then we try to push our product to our existing accounts and sell as much as possible. Self-distributing allows us to take an extra 35% margin. We have a warehouse. We recently hired three sales reps who are managing the Bay Area, and then we have a warehouse manager and driver.

What’s your sales breakdown?

We're doing about 30% direct-to-consumer and about 70% wholesale. I'm working on promoting our Seven Stills locations a little more so we can get closer to 50/50 split.
We feel that getting people in our door, if they try our product, they're going to buy our stuff on the spot. Then when they're not coming to our location, they're going to go out to their local Whole Foods and buy it just because they had a good experience with us. That's why I really believe it's important to have a good blend of direct-to-consumer and wholesale. Obviously, it's a huge advantage to us to be able to have people come in directly to our facility, because we can educate them about our products, we can pour the whiskey or the beer exactly how we want it to be poured, and we can take them through the experience. We can create brand ambassadors much more effectively than we can with somebody who would just go to a bar and order our beer from a menu.

What are your margins?

We're operating on a 85% margin when we sell direct-to-consumer in to-go sales. For in-house consumption, it’s like a 95% margin. In the tap room, we sell a $7 can, a $17 four-pack, which is $168 a case, compared to $78 wholesale. It’s a 215% increase in sales when we sell direct for on-premise consumption.

How do you plan to acquire more of the direct-to-consumer market?

There are a ton of other breweries out there who are making really good products, but they're putting zero focus on their marketing or their salespeople. They're just expecting that the product is going to sell. That's simply not how it works. My strategy right now is extremely simple: I'm basically building a list of influencers. I have a list of about 100 people who are top posters on Instagram, on beer blogs, writers for the San Francisco Chronicle and San Francisco magazines and websites. All I do is send them a can of every beer we come out with. They post about it almost every time. An influencer with 65,000 followers on Instagram -- I send her a can and she posts it every single time. I’ve got about 50 people like that. They don’t say that Seven Stills sent them cans; they just say, “Look at what I’m drinking.” Then, all of a sudden, all these other people start seeing that this big influencer is posting stuff about our cans and they seek us out. I start getting emails. One post can lead to 20 to 30 emails per day.
It costs us about $10 a package to mail two cans together. We’ll send out about 50-100 packages a month, so it costs us $500-$1000. The cans probably cost us $2 each to make. Total, that’s about a $1,700 investment per month in influencer marketing.
We do some more traditional stuff, like advertising, too. It just doesn’t work quite as well.

What product are you most proud of?

I think the biggest differentiator for us is our whiskeys. They’re fundamentally different from craft beers. When Clint and I started Seven Stills, our whole goal was to make seven whiskeys out of seven unique craft beers for the seven hills of San Francisco. We have different street artists from the Bay Area design each bottle for us. Our flagship whiskey is a chocolate, oatmeal-style, peat-smoked malted barley. We won gold medals at the world spirits competition and at ADI for that. Our least traditional is our whiskey made from a double IPA with rye, Vermont maple syrup, and then hopped and dry hopped with cascade, centennial, and simcoe hops. It's crazy complex. It tastes like a concentrated IPA syrup, but it's 47% alcohol by volume. It's amazing.
Then, in addition to doing our core line, we do one collaboration with a different brewery every quarter. The one I’m most proud of recently is our collaboration with Sante Adairius, because in my opinion, they're the best sour brewery in the country. We were able to work with them on this new series. The first batch was aged in their Appreciation barrels, and we'll be releasing two more later this year. They were aged in West Ashley and Westly barrels. Westly has one of the highest trading values of any beers in the country. It's pretty exciting to get like these breweries with dedicated cult followings to partner up with us.
In terms of beer, our focus is on massively dry-hopped, zero IBU single and double IPAs. Eight Pounds per Barrel was one of the first ones we did that was insanely successful. It’s got more than a four-star rating on Untappd after about 1,800 check-ins. That's now our regular IPA, which we're producing and canning every other week. Our other beer is always going to be just some other double IPA. The same kind of style, just a higher-alcohol, super-juicy, New England-style IPA.

Why did you choose your new space in Mission Bay?

The location is amazing. It’s in an area that's totally booming right now. It's not as developed as downtown San Francisco, but it's on the cusp of just blowing up with the addition of the Warriors’ stadium. Right now, 21st Amendment Brewery is the spot to go drink a beer before you watch a Giants game. They probably have 300 people in their bar during every single Giants game, just sitting there drinking beer and eating food. Their facility is maybe 6,000 square feet. They're pretty tiny compared to our new facility.
What we're trying to do is build a 21st Amendment Brewery for the Warriors stadium, on steroids. Our facility is 18,000 square feet. It's really close to the Giants stadium, too, just a five-minute trolley ride away. In addition to that, the top three stories of our building are being rented out by Adobe. That's their new headquarters. We're going to have a built-in customer base of 5,000 Adobe employees. Then, we're directly across the street from the California College of the Arts. That’s another 6,500 students directly across the street.
Beyond that, the rent was really good. The developer is a publicly traded company, and they require amenities for certain projects. For this project, one of their desired amenities was a brewery. It's a really ballsy project to take on. It's going to cost us about $5 million to get it off the ground, but they gave us $1.2 million in a tenant improvement allowance that we're using for construction, plus 18 months of free rent. That’s worth more than $1 million.

What do you plan to do with the money you raise from Wefunder investors?

We broke our raise into two phases. First, we did a pre-Series A that was intended to cover our soft costs, and that was for $700,000. We’re hoping to raise more than $1 million from equity investors. Finally, our lender is giving us $2.65 million to cover all the equipment, furniture, fixtures, and general tangible assets.

Walk me through the new space.

Our architects have virtual reality technology, so although it's not constructed yet, we’ve actually walked through the space. You walk in on the west corner of the building, and there's a massive tasting bar right there. There's a giant wall of barrels that separates the tasting and retail area from the restaurant and bar area. On the tasting side, guests can come in and do a tasting flight. They can buy bottles to go, or explore while they're waiting to get a table.
From there, they walk into like the massive dining and cocktail bar area. On the right is the cocktail bar, featuring all of our spirits, including our vodka and whiskeys. We're going to do a bunch of draught cocktails. We're planning to hire a high-end bar manager to take over that program. At the end of the bar is our kitchen. It’s about 2,000 square feet and inspired by street foods from around the world. Then that's just going to have a pass-through to the bar. Then, to the left, there’s going to be a very large dining room with industrial-style tables and booths. There’s seating for 120 guests in the dining room and 50 at the bar. And then, after you pass through the dining room, there's a giant outdoor beer garden with seating for another 50 people, with fire pits and full-service dining. Underneath the staircase, we're putting in a private lounge. That’s for intimate dining seating that will be available for rental for private parties and stuff like that.
Finally, past the bar, there is going to be another wall of barrels. You're going to be able to push on one of the barrels and it's going to open a door and take you to a stairwell. Once you go through the stairwell, you'll go up the stairs to a speakeasy-style private whiskey bar on the second floor. We're going to put one-way glass there, which will allow patrons to overlook the entire facility, including the distillery and the dining room below. You'll be able to see everybody, but nobody will be able to see you. There, we're going to install whiskey lockers for our club members and bigger investors to use. They can have their guests come to this private speakeasy area and open their own bottles. We'll have a second bar upstairs with a draft tower with four beers for people to try. The draft tower downstairs will have 20-plus beers. We're going to put a pool table and lounge seating, super speakeasy style. Beyond that, there’s a mezzanine that will be available for private events, but mostly it will be used for production.
In the back of the facility, we are moving our 300-gallon pot still. We're also purchasing a 750-gallon pot still, which will be the largest still in San Francisco. Finally, we’re installing a 30-barrel brewhouse and twenty 60-barrel fermenters.
It’s going to be incredible. We’ve been working on it for about 16 months. It took about a year to negotiate the terms with the developer. We signed the lease two or three months ago. Now we've been working with our architects and designing it.

When do you plan to open the new facility?

We plan to open in October 2018.
The builder is currently building the space to our specs. They left a lot of the facilities open, so once we finish the plans, we can have our general contractor go in and do the construction and finishing work. The base building is already there and everything is already constructed. They’re just waiting for us to finish permitting so that we can do our construction, which should take about 50 days after the permits are issued.

What has been your biggest challenge so far?

Our biggest challenge by far has been keeping up with the growth. Demand for everything that we've done has outpaced our supply. We're constantly trying to expand and get creative without overextending ourselves and giving away too much of the company.

What concerns do you have about the future?

What really keeps me up at night is that I'm a crazy entrepreneur and I keep getting ideas no matter what time of day it is. I guess that should be scary, but it's not, really, it's just like I’m constantly trying to figure out something that we can do better or something that would be cool. I’m obsessed with taking things to the next level and constantly improving, which is not great if you're trying to have a stable business, but I like to keep things exciting.

Who’s on your team?

Until 2015, it was Clint, my co-founder, and me. We hired my friend Jeff near the end of 2015. He helped us by bartending, making some sales, cleaning up some stuff, helping me brew a little bit. In 2016, we hired our first 10 people, mostly bartenders and a production assistant. Then, in 2017, we grew to 30 employees. As of now we're up to 39. We expanded so rapidly last year, it’s crazy.
The way our team is structured is that Clint manages all production, so he's our COO. He manages all of the scheduling. Underneath him is our production manager, Rylan, who came from Speakeasy, and he ran their production until they went out of business. He's been working for us since then. He's one of the best brewers that I've ever met. We just hired Brandon, who is our head brewer. He came from Faction brewing. We've got Chris Lucas, who came from Bare Bottle Brewing. Our production team has two additional part-time staffers.
On my side of things, we’re building out a sales team. I just hired Conner, who is our sales manager. He's regional. He came from Gus's Markets, a big grocery store chain in San Francisco, and he was working for a cider company before we recruited him. He's got a ton of experience in retail. Under, him we just hired two new sales reps: Michelle came from Cask, which is one of the biggest craft whiskey shops in San Francisco, and Mitchell from Morris Distributors. They're insanely skilled.
Additionally, we've got a marketing guy who runs all of our social media and all of our online content, Ryan Kelly. He was a marketing campaign manager for politicians and has a ton of experience in that area. We've got a design guy who does all of our creative conceptual stuff, including graphics. We hired him as an intern from CCA and he’s grown with us for the last two years. We just hired our warehouse manager, who came from a health food warehouse management position.
All in all, our focus has really been on hiring the best people possible, who have more experience in their field than we do, so they can teach us.
Finally, I have an incredible team of advisors. Mike is my closest advisor. I work with him a couple of times a week. His background is in venture capital, so he really helps us out with the strategies, fundraising, financing, networking kind of stuff. He started Puenta Labs, and he's the advisor for another guy who started a cryptic currency company in San Francisco. Sam is one of my immediate advisors -- he is the vice president for mergers and acquisitions for SalesForce. I have his cell phone number and I call him when I have issues. He's this huge, huge player, and he’s absolutely amazing. Finally, Chris is the CEO of Assay Advisors who specializes in mergers and acquisitions. He advises me on strategy as well.

Financials

Seven Stills has financial statements ending December 31 2017.
Our cash in hand is $50,000, as of June 2018. Over the three months prior, revenues averaged $250,000/month, cost of goods sold has averaged $60,000/month, and operational expenses have averaged $130,000/month.

At a Glance

Fiscal Year Ends January 1

$1,179,655
+90%

Revenue

$103,864
[16%]

Net Profit

$252,342
+16%

Short Term Debt

$1,113,000

Raised in 2017

$50,000

Cash on Hand
As of 06/12/18

Income

Balance

Narrative

Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

For centuries, whiskey distillers believed that the flavor of the base beer didn't impact the finished whiskey so they'd use low-quality barley ingredients. Clint and I proved them wrong. In 2013, we started brewing high-quality craft beers to distill into whiskeys. The flavor profiles are drastically different between our products – and people love it. Now you can find Seven Stills craft beer and whiskey at our three San Francisco taprooms and more than 2,500 retail stores.

We've seen steady growth since launch and are on track to reach $3.5 million in sales this year, a 190% increase from last year. In five years, we aim to be the number one brewery and distillery in San Francisco with distribution throughout the United States.

Milestones

Seven Stills, Inc was incorporated in the State of Delaware in May 2018.

Seven Stills, LLC will merge into Seven Stills, Inc. upon issuance of all necessary licenses to do business. Upon the merger, Seven Stills, Inc. will absorb the entity Seven Stills, LLC and all equity purchased in the LLC will be reflected in the new corporation.

The objective of the merger is to act as a non-pass through entity, meaning investors will not receive an annual K-1 requiring them to pay taxes on any phantom income due to their ownership in the company. All taxes will be paid upon the eventual dissolution of the investors' equity.

The company plans to authorize class E common stock prior to the closing of this offering.

The milestones, historical results of operations, and liquidity and capital resources listed below are those of Seven Stills LLC, not Seven Stills Inc. Upon the completion of the merger, Seven Stills, Inc will gain these historical results of operation and resources.

The financial statements attached to this Form C are those of Seven Stills, LLC, not Seven Stills, Inc. Upon the completion of the merger, Seven Stills, Inc will gain the financial conditions of Seven Stills, LLC.

Since organization, Seven Stills LLC has:

2,500+ retail locations

November 2016 - Opened first satellite taproom and restaurant in Outer Sunset of SF

March 2018 - Opened second satellite taproom and restaurant in the Stanford Court in SF

April 2018 - Signed lease for flagship brewery, distillery, restaurant, cocktail bar, taproom and retail shop in SoMa of SF.

Historical Results of Operations

Revenues & Gross Margin. For the period ended December 31, 2017, the Company had revenues of $1,179,655 compared to the year ended December 31, 2016, when the Company had revenues of $621,833. Our gross margin was 81.61% in fiscal year 2017, compared to 80.25% in 2016.

Assets. As of December 31, 2017, the Company had total assets of $867,468, including $102,106 in cash. As of December 31, 2016, the Company had $555,052 in total assets, including $37,876 in cash.

Net Income. The Company has had net income of $103,864 and net income of $123,767 for the fiscal years ended December 31, 2017 and December 31, 2016, respectively.

Liabilities. The Company's liabilities totaled $580,609 for the fiscal year ended December 31, 2017 and $315,936 for the fiscal year ended December 31, 2016.

Liquidity & Capital Resources

To-date, Seven Stills, Inc. has been financed for $790,500 in equity and Seven Stills LLC has been financed for $375,000 in equity.

The Seven Still business has been financed with $3,461,006 in debt.

We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.

We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.

Runway & Short/Mid Term Expenses

Seven Stills, LLC cash in hand is $50,000, as of June 2018. Over the last three months, revenues have averaged $250,000/month, cost of goods sold has averaged $60,000/month, and operational expenses have averaged $130,000/month, for an average net margin of $60,000 per month.

The company has raised 2.5million in debt for this most recent project that will go towards the opening of the new facility. Kilroy Realty Group, the developers, have also given us $1.2million to complete the project in exchange for being in their building. We've also raised $600k from existing investors for this recent project. If we reach our maximum goal on Wefunder we will not seek further funding. If we only reach our minimum funding target we will seek investments from more traditional investors and VCs. The total cost of the project is $5.5mil.

If our Wefunder campaign is successful, we plan to open in November of 2018. We generally do 53% of our total sales in Q4 of the year. Because our expenses for the first 18 months will be nominal, as our rest estate company is covering our rent, we expect the new location to become profitable within a month. When we opened our satellite facility in 2016 it was profitable within the first week.

A note from Wefunder. Unlike companies on the NASDAQ, early-stage startups have little operating history. Financial analysis is not as useful when there is limited data. It's more important to predict the size of the future market. If the founder achieves their vision, will enough customers pay the company enough money?

It's also common for fast-growing startups to lose money even faster: they are investing in future growth. In these cases, it's often better to check if the Cost of User Acquisition (CAC) is lower than the Lifetime Value (LTV) of that customer. If one spends $1000 today to make $10,000 over the next five years, that may be a smart bet. Amazon is a famous example of re-investing potential profits to maximize growth over 20 years.

Risks

1

Consumer demands can change, and decreases in alcohol consumption could result in decreases in revenue.

2

Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.

3

Consumer disposable income could change, affecting the amount spent on premium beers and spirits.

4

If a violent or catastrophic incident occurred near our facility we could risk losing tourist and destination traffic.

5

In the case that several competitors opened up in the vicinity there is a chance we would lose foot traffic and revenues to our business.

6

Social media influencers could begin to dislike our products and discourage others from buying from us, which would result in a loss of revenues.

7

An increase in the cost of raw materials or energy could affect the Company’s profitability. Commodity and other price changes may result in unexpected increases in the cost of raw materials, glass bottles and other packaging materials used by the Company. The Company may also be adversely affected by shortages of raw materials or packaging materials. In addition, energy cost increases could result in higher transportation, freight and other operating costs. The Company may not be able to increase its prices to offset these increased costs without suffering reduced volume, sales and operating profit, and this could have an adverse effect on your investment.

8

Purchasers will not have voting rights, and therefore may have limited control over company operations. In addition, the two co-founders control 100% of the total voting power of the company as of July 2018, and prior to the closing of the offering will control over 85% of voting power.

9

Expanding our geographic footprint is an important aspect of our plans for growth. With those efforts come potential costs and risks that could affect our business success. We may not be able to meet our goals for expansion and see impacts to our business operations as a result.

10

Companies in the beverage alcohol industry are, from time to time, exposed to class action or other litigation relating to alcohol advertising, product liability, alcohol abuse problems or health consequences from the misuse of alcohol. It is also possible that governments could assert that the use of alcohol has signiﬁcantly increased government funded health care costs. Litigation or assertions of this type have adversely affected companies in the tobacco industry, and it is possible that we, as well as our suppliers, could be named in litigation of this type.

11

The Company is in the process of merging with Seven Stills, LLC, and expects this to be finalized prior to the closing of this offering. Should this merger not be completed on time or at all, it may affect investor's ability to be issued stock, as well as the overall operations of the Company. Furthermore, the Class E Common stock sold in this offering has not yet been authorized by the Company.

12

The Company has significant outstanding debt, totaling over $3 million. Should the company's revenues or costs vary from their predicted outcomes, the Company's financial position may be harmed. The Company is not prohibited from taking on more debt in the future.

13

Investors in this subscription agreement may forfeit their right to the shares if they violate the terms listed in the contracts provided.

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What people are saying

I met Tim and Clint when they were operating out of a storage facility still proving to the world distilling craft beer creates new and wonderful taste profiles. I remember the hockey-stick sales growth curve Tim showed me on a small whiteboard in that facility - he's bought a much bigger whiteboard since that day so they can track their sales! It's been amazing to see these two hustle and establish Seven Stills as a premier whiskey distillery & brewery in such a short time. I'm really excited to see the next stage of growth for Seven Stills and see them become a staple in every bar across America.

David Shin

Lead Investor, Seven Stills

Seven Stills' bright and industrial tasting room is a great place for small groups thanks to tables, counters, and stools made out of barrels.

Chocosmoke is delicious, chocolatey upfront and earthy like sourdough crust, and Whipnose is astonishing. Distilling amplifies the flavors of mash, but it also has a way of eliminating bitterness and softening sour notes, which makes good work of an IPA’s hoppy profile. Additionally, the process seems to enhance an IPA’s aromas, but on the tongue it leaves a pleasant, prickly sharp whiskey that’s as fresh and sweet as a mowed lawn.

Tomahawp isn’t overdone. The nose finds plenty of musky, peppery hop aromas, but underneath that bitterness there’s a mint chocolate note and hints green apple as well as coffee. The palate kicks off unsurprisingly, a tobacco and heavy herb note, with hits of cloves and burnt toast lingering. The finish is sweeter than expected, but spicy with black pepper and showing lingering coriander notes.
Tomahawp doesn’t reinvent the world of IPA-distilled whiskeys, but it’s still a well-crafted example of the style.

Seven Stills owners Tim Obert and Clint Potter offer the best of both worlds for whiskey lovers and hop-heads: whiskeys made from their own craft beers. The spirits are produced in a towering copper pot still at the brand’s 4,400-square-foot Bayview facility. The space was designed by Obert himself, who brought in local street artists to adorn the walls. The 30-minute tour includes a tasting flight of the brand’s four whiskeys, distilled from a chocolate oatmeal stout, a double IPA, a coffee porter and a sour beer. In early 2017, Seven Stills launched the Lawton Taproom, an Outer Sunset bar where fans can sample the brewery’s craft beers and shandies.

Seven Stills of SF, the city's newest and only mainland distillery. Their initial public offering: a small batch of notably non-Russian vodka called California Courage.
Now available online and in a handful of city shops and bars, Courage has a subtle, almost citrus hint of corn sweetness that isn’t cloying — smooth enough to sip straight, light and soft enough that it won’t offend more delicate buds.

Notes from investors

I invested because I like whiskey.
I like your inventiveness with this product and i’m Excited to see it grow and mature.
I’m also a Bayview resident and want to support this venture, in a small way, but still.
Best of luck!

I have been procrastinating....more over I like the beer and distilled product comparison of compliment...very cool and hope to maybe add to investment...but sometime all you can do is all you can do. Good luck and will be stopping by when in San Fran. I got a great location for this in Madison WI.

We enjoy your beverages and live a few blocks from your Lawton location! We have been with you guys from the start and love that your Lawton location is family friendly as well! Best of luck! Tina, Suwanna and Alex!

I've been working in the beer industry in SF for 11 years. I wanted to be a part of a new exciting company in my field. I wanted to feel apart of a new SF company and also have been looking to move toward the Bayview neighborhood. I also like whiskey 😉

Hi Tim and Clint....this is Mark & Molly Burke in Sunset of SF. We live on 36th and Kirkham and born and raised in Sunset. We love your Kirkham location and both of us went to Holy Name up the block. We have deep attachment to the neighborhood and know lots of people and refer them to Kirkham all the time. We are also associated with the United Irish Cultural Center which is next to Zoo in the Sunset (a stones throw from Kirkham) and could host a Seven Stills event in future if you want. It has a upstairs with 600 capacity and a beautiful hall! We look forward to watching "you" grow, or should I say "we". Go take the world! Thanks....Mark & Molly Burke (Mark cell 510-316-2696)

In the news

Toff Plonker ESB (6.5%, $7/glass): At 6.5 percent and much paler than its counterparts, this Extra Special Bitter is not quite true to the English style, but it nevertheless delivers the requisite nutty malt overtones and subtle tea-like hops.

"Quiet on the set!" The director is shouting, flanked by a woman behind the bar grasping a boom pole and a man adjusting his camera. A forklift by the 300-gallon copper whiskey still has ceased beeping and filming is set to resume when Tessie, a particularly vociferous pup, yowls loudly.

From apocryphal Mark Twain quotes about our frigid summertime to the acceptability of assless chaps, SF is no stranger to the poetic lie. So, too, the myth of the SF distillery. Much as we love Alameda and TI (and the booze there made), neither floats within city limits.

Whiskey distilled from craft beer is the name of the game at Seven Stills Brewery. The process begins with house-made beer, whose varieties include "beerceptions" (beer that's been aged in a whiskey barrel made from the same beer...meta, we know), and collaborations with other breweries, like a recent peanut butter milk stout brewed with Belching Beaver. Said beers are then distilled into whiskey, proving that the brown stuff is only as good as the beer from which it's derived. Seven Stills' bright and industrial tasting room is a great place for small groups thanks to tables, counters, and stools made out of barrels.

Three years ago, college friends Tim Obert and Clint Potter started an experiment in the concept of making whiskey from craft beer. The idea quickly grew into a business, and this July, Seven Stills opened its doors in a 4,400-square-foot brewery/distillery space at UrbanPoint SF, which provides Bayview industrial space to manufacturers and makers.

A shot of whiskey and a chaser of beer has long been a standby after a hard day of work or during a night out. But now, the two drinks are being fused together in a whole new way. Distilleries are now making whiskey out of craft beer.

Seven Stills of San Francisco continues its march of collaborative whiskeys with Tomahawp. It starts as a Double IPA (also called Tomahawp) brewed in collaboration with Alvarado Street Brewery. The whiskey takes the Tomahawp beer and ages it in new American oak.

Seven Stills of San Francisco, a craft brewery and distillery gaining a reputation for its fresh beer and craft whiskey distilled from that beer, is opening a new, upscale outpost to showcase its many unique products: A bar inside the Stanford Court Hotel high atop Nob Hill.

San Francisco is a city saturated: single-origin coffee, pickles, artisanal cutting boards, leatherworkers, flannel, craft beer. For the last of these, our scene has proven to have the invisible elasticity of a clown car when it comes to holding legions of triple-hopped IPAs, sour beers with a barnyard funk, Belgians thick as syrup.

Seven Stills owners Tim Obert and Clint Potter offer the best of both worlds for whiskey lovers and hop-heads: whiskeys made from their own craft beers. The spirits are produced in a towering copper pot still at the brand's 4,400-square-foot Bayview facility.

Industry and Media Launch Party at Dolmen Property Group's PDR Space in Bayview SAN FRANCISCO (July 13, 2016) - Seven Stills of SF, a local distillery specializing in creating whiskey's distilled from their own craft beers, will hold a Grand Opening for their new brewery, distillery and tasting room on Saturday, July 16.

Bayview is shaping up to be San Francisco's hot new brewery and distillery destination, with places like Laughing Monk and Sequoia Sake leading the charge. Now, Seven Stills, a whiskey distillery, has joined the party, bringing its whiskey distilled from beer to a 4,400-square-feet space that, as of today, welcomes the public.

Both are in their late 20s and some of the youngest distillers in the country, but what's even more special is their approach to Whiskey from the beer drinker's perspective. Tim's drink of choice is beer.

A new craft distillery from a pair of beer and whiskey enthusiasts is taking shape at the edge of Potrero Hill (2501 Cesar Chavez), and it's called Seven Stills. It's the project of two guys, Tim Obert and Clint Potter who studied business together at UC Santa Cruz, and it was inspired in part by Obert's four-year-old obsession with brewing beer.

March 29, 2013
@ grubstreet.com

03

29

2013

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